Gold rises slightly on U.S.-China tensions, gloomy economic outlook

Spot gold was up 0.2% at $1,735.04 per ounce by 0042 GMT

  
Image used for illustrative purpose. An employee holds a 1kg gold bar at AGR (African Gold Refinery) in Entebbe, Uganda, October 4, 2018.

Image used for illustrative purpose. An employee holds a 1kg gold bar at AGR (African Gold Refinery) in Entebbe, Uganda, October 4, 2018.

REUTERS/Baz Ratner

Gold prices inched up on Tuesday, supported by strained Sino-U.S. relations and a dismal global economic outlook, although positive news from an early-stage trial for a coronavirus vaccine spurred some risk appetite and capped the metal's gains.

FUNDAMENTALS

* Spot gold was up 0.2% at $1,735.04 per ounce by 0042 GMT. U.S. gold futures GCv1 gained 0.2% to $1,737.10.

* On Monday, the metal fell back from a more than seven-year high to settle 0.5% lower, as stocks and oil surged after drugmaker Moderna said its experimental vaccine showed promising results in an early-stage trial.  

Highlighting Sino-U.S. friction, stock exchange Nasdaq Inc is set to unveil new restrictions on initial public offerings, which will make it more difficult for some Chinese companies to debut on it, sources said. 

* U.S. lawmakers and officials are crafting proposals to push American companies to move operations or key suppliers out of China that include tax breaks, new rules, and carefully structured subsidies. 

* Money markets ramped up expectations that the United Kingdom could cut interest rates below zero for the first time. 

* The global economy will take much longer to recover fully from the shock caused by the new coronavirus than initially expected, the head of the International Monetary Fund said. 

* Gold has risen about 14% this year as central banks rolled out a wave of rate cuts and other stimulus to limit the economic damage from the pandemic. Lower interest rates reduce the opportunity cost of holding non-yielding bullion. 

* Epicentres of the coronavirus outbreak including New York, Italy and Spain are gradually lifting restrictions that have kept millions inside. 

* Palladium slipped 0.9% to $1,995.76 per ounce, platinum fell 0.5% to $814.01, and silver fell 0.5% to $17.09.

DATA/EVENTS (GMT) 0600 UK ILO Unemployment Rate March 0600 UK Employment Change March 0900 Germany ZEW Economic Sentiment May 1230 US Building Permits: Number April

(Reporting by Harshith Aranya in Bengaluru; Editing by Subhranshu Sahu) ((harshith.aranya@thomsonreuters.com; Within U.S. +1 651 848 5832, Outside U.S. +91 80 6182 2599; Reuters Messaging: harshith.aranya.thomsonreuters.com@reuters.net))

More From Commodities